Ltl Shipments to Ftl Shipments
PROBLEM
The issue being encountered in this case is weather the logistics manager should switch from LTL shipments to FTL shipments. He is weighing the advantages and disadvantages of making the switch. We will therefore analyse the best option for him to proceed with.
CAUSE
This problem was highlighted after the shipping patterns were analyzed by the logistics manager. It was discovered that no more than 10 pallets of product was ordered at a time. He realized that by shipping the maximum amount permitted would allow him to increase his shipment size and gain from the benefits of doing so.
ANALYSIS
If the new FTL method of shipping is undertaken then the shipment size will increase from 10 pallets to 26 pallets which is an increase of 62% in shipment size.
In concurrence with the increase in shipment size is an increase in freight cost.
Ultimately shipping cost will increase from $2000 to $2500 which is a 25% increase. The reason for the vast difference in percentages is that increasing the size of the shipment won’t affect the price as drastically.
Option one is for the logistics manager to switch from LTL to FTL. The main advantages are that transit times are much shorter with FTL than LTL. Also freight is never handled on route with an FTL shipment whereas with LTL shipments products will be transported on several different trailers resulting in more handling and risk of damage.
The main disadvantages of FTL are that the costs would be more since an entire truck and trailer is being utilized for the entire shipment. Also FTL shipments typically don’t offer extra services like lift gate at pick up or delivery, inside delivery, notification prior to delivery and freeze protection. Another disadvantage of FTL is that